Financial Reporting Flashcards
What is the difference in the process of valuing anticipated L&E vs Actual L&E?
Actual L&E can be proven in court so there it cannot be legally challenged as it has incurred
Anticipated L&E is bespoke and can include head of claims items (e.g. loss of income) that cannot be proven thus would have to be challenged by the Client’s QS
Give me examples of Heads of Claims under L&E?
–Prolongation
–Site overheads and running costs
–Thickening of preliminairies
–Main Office OH&P
–Loss of opportunity
–Insurance Costs
–Subcontractors claims
What impact will the contractor behind programme have on a cashflow?
Cashflow behind projected expenditure – less works executed/ materials on site so less costs incurred.
Increased cost in case the contractor attempts to make up for the time lost – increased site labour, costs in the period etc
What goes into a cost report?
–Executive Summary –Contract Sum –Changes / Instructions –Instruction of Prov. Sums –Cashflow –Contingency –Early Warnings –Claims / L&E –Rolling Final Account
What assumptions and exclusions do you include in a cost report?
- professional fees
- statutory fees and charges
- third–party costs
- direct works costs
- land costs
- agency costs
- finance cost; and
- legal fees
- VAT
- Ascertained L&E (if not appointed to do so)
- Loose FFE costs
How do you carry out a cashflow?
Break the value of each of the works in the contractors programme and make a separate cashflow for the expenditure (assume S–Curves if no further details available)
Include any advance payments, payments for design, fixed and time related preliminaries
Add all to produce the project cashflow
What constitutes cost of variations when taking out a pitched roof and the flat roof?
Cost for roof structure (rafters, joists, ridge, purlins)
Replace with flat structure
roof sinishes – terraced?
Pitched vs flat area of roof finishes
Additional allowance for rainwater piping / dainage
If the contractor is ahead of programme, how do you react?
If the contractor is indeed ahead of the projected programme, higher expenditure is expect to incur earlier
However I need to ensure whether the contractor is indeed ahead of programme or he is trying to frontload the cashflow which could be potentially an indicator of having difficulties
Check with PM/EA/CA if the assessment is realistic
How do you do a Loss & Expense calculation?
–Not included in Cast's appointments –I am aware of the principles –Assess the Relevant Matter that gave rise to the claim and calculate the main heads of claims: –Preliminaries for delay –Prolongation –thickening –Main office OH –Depriciation of Plant and machinery –Loss of opportunity cost
How do you adjust contingency?
Contingency is offset against cost overruns over the key items.
During design stage: Design development, client change, client other
During construction: client change, construction contingency
In Stanmore there was a different contingency pot to deal with development changes
Always make sure that the outstanding amount of contingency is appropriate for the level of works left to be completed
When changing from brick to stud wall what would you anticipate to be the cost
Price as per NRM 2 (Detailed measurement for building works)
Omission of brick wall including brick, mortar, insulation, lining (£100 – £150 per sq. m). Allowance for contractor’s prelims, OH&P. Removal of lintels, penetrations, ties, crams
Construction of timber stud partition, insulation, skim and plaster to the wall. (£375 per l.m.). Allowance for openings, penetrations, prelims, OH&P
What did you include in the Final Statement to the Client?
–Contract Sum –Value of instructions –Deduction of provisional sums –L&E Claims –Cost of prime cost items –Cost of dayworks items
What is the difference between cost control and cost reporting?
Cost control is about managing the expenditure of the project, understanding risks that affect the costs and maintaining a control over the final account.
Cost reporting is about monitoring and reporting on the costs rather than substantially affecting the commercial outcome of the project.
